Little Boy Ltd. is a Canadian public corporation whose shares

Little Boy Ltd. is a Canadian public whose shares are traded on the Alberta Stock Exchange. The company operates a chain of grocery stores in western Canada. Little Boy began as a small family business owned by the three Hardy brothers, but grew rapidly due to the brothers’ aggressive business policies and their ability to identify prime locations for their stores. Ten years ago, the company became a public it raised substantial equity and used it to fund a major expansion. Much of the funding was used to acquire land and construct stores according to the particular specifications that suited their business.

Even after the public share issue, the Hardy brothers maintained 60% of the company’s common shares. The company’s shares traded actively on the Alberta Stock Exchange. The share values have increased steadily along with the company profits. Historically, the shares have traded at 10 times the after-tax earnings per share—a value consistent with that of other public companies in the same industry. Last year, one of the brothers died. His estate has gradually disposed of his shares in Little Boy by selling them on the open market. This has left the remaining two brothers with 40% of the common shares. The remaining shares are widely held.

Not long ago, Joel Hardy, the president of Little Boy, received information that a particular investor was showing an unusual interest in the corporation’s shares and was quietly buying them in large blocks. After further investigation he discovered that the investor was a holding owned by an individual with a history of taking over and liquidating corporate businesses.

The most recent of Little Boy is shown in Exhibit 1. Additional financial information is provided in Exhibit 2.

1. After-tax corporate profits for the current year amounted to $2,000,000. The corporate tax rate is 27%.

2. Amortization expense deducted in arriving at the above profit is as follows:

Equipment (12% straight line) ……………………. $347,000
Buildings (4% diminishing balance) ……………… 320,000

3. The company occupies a total of 150,000 square feet of building space. Of this area, 10,000 square feet are leased at the current rental rate of $10 per square foot. This property was leased from a real estate investor who had purchased land and constructed a building according to the company’s specifications. The property had cost the investor $1,000,000. Little Boy is responsible for all expenses associated with the leased property. The remaining stores occupy space in buildings that are owned by Little Boy.

4. The undepreciated capital cost of the buildings for tax purposes is not significantly different from book value.

Required:

Analyze the financial information, and explain why Little Boy may be the target of a takeover bid.

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Briefly summarize the GST/HST implications for each of the following

Briefly summarize the GST/HST implications for each of the following independent scenarios involving real property:

(a) Peter is a first-time homebuyer who purchased a detached house to use as his principal residence. The prior owner lived in the home for 30 years.

(b) Cathy is the owner of a beauty salon and pays monthly rent to operate her business in a unit of a local plaza.

(c) ABC Ltd. constructs a new build with 100 residential condominium units. Upon completion, the entire building is sold to XYZ Co., which intends to lease out the condominium units to individuals for periods of at least 12 months. ABC Ltd. and XYZ Co. are both GST registrants.

(d) Same scenario as (c), except XYZ Co. is not a GST registrant.

(e) Ankit is a student enrolled in a graduate program at the University of Toronto. As part of the program, he accepts a 4 month co-op position at a major accounting firm’s Calgary office and rents a condo to live in during his stay.

(f) Emily purchases a new home in a residential neighbourhood directly from the builder.

(g) While out of town on short business trips, Michael rents out his Vancouver home using a peer-to-peer property rental app to earn some extra income.

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Dan uses a popular ridesharing app to earn some extra

Dan uses a popular ridesharing app to earn some extra income on evenings and weekends by driving others around downtown Toronto. Dan began ride-sharing on July 1, 20X8 and voluntarily registered for HST right away as an annual filer with a calendar year end. The following information relates to his first reporting period of July 1, 20X8 to December 31, 20X8 (all amounts exclude 13% HST):

• Dan purchased a new car on July 1, 20X8 and paid $55,000. He drove the car 10,000 km from July to the end of December. During this time, approximately 3,500 km were related to ride sharing trips.

• Customers typically pay a booking fee directly to the provider of the ride-sharing app when using the service. Dan’s total fares collected for the reporting period net of any booking fees were $4,800.

• Automobile expenses for the year included $900 of gas and $700 of insurance.

• Other expenses consisted of $300 for a vehicle inspection by a licensed mechanic required to use the ride sharing app and $150 of business-related parking.

Determine:

(a) Dan’s net tax remittance for the June 1–December 31, 20X8 reporting period

(b) Dan’s filing and remittance deadlines for the June 1–December 31, 20X8 reporting period

(c) Whether or not Dan will need to make HST instalments in 20X9

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